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2 CHALLENGES FOR MANAGERS
Chapter Scan
This chapter focuses on the changes and accompanying challenges those changes will bring about in the coming decade. Four major challenges facing managers include globalizing the firm’s operations, leading a diverse workforce, encouraging positive ethics, character, and integrity. Globalization has created a boundaryless market in which all firms, large and small, must compete. Cultural diversity within the United States encompasses all forms of differences among individuals, including age, gender, race, and ability. Ethical issues compound the complex challenges of management, and involve things such as white-collar crime, computer use, employee rights, sexual harassment, romantic involvement at work, organizational justice, whistle-blowing, and social responsibility.
LEARNING OBJECTIVES
After reading this chapter, you should be able to do the following:
1. Describe the dimensions of cultural differences in societies that affect work-related
attitudes.
2. Explain the social and demographic changes that are producing diversity in organizations.
3. Evaluate the actions managers can take to help their employees value diversity.
4. Discuss the assumptions of consequential, rule-based, and character ethical theories and
explain how they help people in organizations make the “right” decisions.
5. Explain six issues that pose ethical dilemmas for managers and provide suggestions for
handling them.
6. Explain the three types of organizational justice and how they affect ethical decision
making in organizations.
KEY TERMS
Chapter 2 introduces the following key terms:
character theory interactional justice
collectivism masculinity
consequential theory power distance
distributive justice procedural justice
diversity rule-based theory
expatriate manager social responsibility
femininity time orientation
glass ceiling transnational organization
guanxi uncertainty avoidance
individualism whistle-blower
the CHAPTER SUMMARized
I. THINKING AHEAD: PIXAR ANIMATION STUDIOS – A Dream Challenged from the Start
II. MANAGEMENT CHALLENGES IN A NEW TIME
Recent surveys indicate that U.S. firms are encountering unprecedented global competition. Chief executives note their primary challenges as (1) globalizing the firm's operations to compete in a global village, (2) leading a diverse workforce, and (3) encouraging positive ethics, character, and personal integrity. Successful organizations respond to these challenges as opportunities instead of threats.
III. THE GLOBAL VILLAGE
The concepts of globalization have helped to define the terms organizations use to determine the level of activity in the global marketplace. Globalization implies that the world is free from national boundaries, whereas international carries with it a connotation of nationality. Transnational organizations must place global viewpoints above national issues.
A. Changes in the Global Marketplace
Numerous global, social, and political changes have led organizations to change the way they conduct business and encourage their members to think globally. A few of these changes are the unification of East and West Germany, the European Union, the political changes in Russia and opening of business ventures in Russia and China, and NAFTA. Business ventures in China have helped to emphasize the importance of guanxi, or networking, in order to accomplish personal and business goals.
B. Understanding Cultural Differences
In order to compete globally, and because cultural differences affect work-related attitudes, organizations must understand diverse cultures. Hofstede’s research focused on the differences among cultures in work-related settings and found five dimensions of cultural differences that formed the basis for work-related attitudes.
1. Individualism vs. Collectivism
Individualism describes cultures in which people have primary concern for themselves and their families. Collectivism describes cultures in which people belong to tightly knit social frameworks and depend on extended families. Group decisions are valued and accepted.
2. Power Distance
Power distance is the degree to which a culture accepts unequal distribution of power. High power distance cultures are more accepting of unequal power distributions; low power distance cultures are less accepting.
3. Uncertainty Avoidance
Uncertainty avoidance is the degree to which a culture tolerates ambiguity and uncertainty. Cultures with high uncertainty avoidance place importance on security and tend to avoid conflict. People are more willing to take risks in cultures with low uncertainty avoidance.
4. Masculinity vs. Femininity
In cultures that are characterized by masculinity, assertiveness and materialism are valued. Cultures that are characterized by femininity emphasize relationships and concern for others.
5. Time Orientation
The time orientation value determines the long-term or short-term orientation of a culture. Long-term orientation is toward the future, whereas short-term orientation is toward the past and present.
6. U.S. Culture
The United States scored higher on individualism than any of the other countries measured. The U.S. ranked low on power distance, is tolerant of uncertainty, and is a masculine culture with a short-term orientation.
There is an increase in organizational cooperation for training employees for cultural sensitivity. Cross-cultural task forces or teams are increasing. Employees are more often being trained to be expatriates. Integrity, insightfulness, risk taking, the courage to take a stand, and the ability to bring out the best in people are key competencies for expatriate managers, who work in countries other than their home countries.
C. Developing Cross-Cultural Sensitivity
As organizations compete in the global marketplace, employees must become more skilled at working with individuals from divers cultural backgrounds. Cultural sensitivity training is a popular method for helping employees recognize and appreciate cultural differences. Human resource managers must prepare employees to live outside their native countries, and must also help foreign employees learn to interact with U.S. culture.
IV. THE DIVERSE WORKFORCE
Diversity encompasses all forms of differences among individuals, including culture, gender, age, ability, religion, personality, social status, and sexual orientation. Motivation and communication skills must be adapted to account for diversity.
A. Cultural Diversity
Cultural diversity is increasing due to the globalization of business. Demographic changes significantly affect diversity as well. Population shifts have dramatically increased the proportion of Hispanic and African-American workers in the labor force. The challenge for managers is to capitalize on the wealth of differences provided by cultural diversity.
B. Gender Diversity
Women made up over 60 percent of the labor force in 2004, and predictions suggest that by the year 2010, 70 percent of new entrants into the workforce will be women and/or people of color. Women continue to receive less compensation for work, and the transparent barrier referred to as the glass ceiling continues to keep women from rising above a certain level in organizations. Women comprised only 13.6 percent of corporate board members in 2003.
C. Age Diversity
The number of middle-aged Americans will continue to rise, resulting in an older work- force. This will place emphasis on intergenerational work situations. This will also have an impact on benefits and policies relating to an aging workforce.
D. Ability Diversity
The number of disabled individuals in the workforce has increased dramatically because of the passing of the Americans with Disabilities Act in 1992. This law stipulates that employers should make reasonable accommodations to assist disabled individuals in becoming contributing employees.
E. Differences are Assets
Managing diversity is one way in which organizations can become more competitive. Part of the challenge in managing diversity lies in attempting to combat prejudices and discrimination. As the workforce becomes more diverse in the next decade, it will be imperative that companies appreciate diversity.
F. Diversity’s Benefits and Problems
Diversity management can help organizations attract and retain human resources, enhance marketing efforts, promote creativity and innovation, improve problem solving, and enhance organizational flexibility.
Five problems associated with diversity include resistance to change, lack of cohesiveness, communication problems, interpersonal conflicts, and slowed decision making.
V. ETHICS, CHARACTER, AND PERSONAL INTEGRITY
There is plenty of evidence that ethical problems are still a major concern in corporations. The toughest of these problems include employee theft, environmental issues, conflicts of interest, and sexual harassment. Managers have the responsibility of initiating programs to improve the ethical climate.
Consequential theories of ethics emphasize the consequences or results of behavior. In contrast, rule-based theories of ethics emphasize the character of the act itself rather than its
effects. The third type of ethical theory, character theory, emphasizes the character of the individual and the intent of the actor.
A. Employee Rights
Employee rights encompass many current issues, such as drug testing, free speech, due process, smoking policies, AIDS/HIV disclosure, and even questions regarding activities away from the organization.
B. Sexual Harassment
Sexual harassment includes verbal or physical unwelcome sexual attention that affects job conditions or creates a hostile work environment, and consists of three types of harassment: gender harassment, unwanted sexual attention, and sexual coercion. Sexual harassment costs the typical Fortune 500 company $6.7 million per year in absenteeism, turnover, and loss of productivity.
C. Romantic Involvements
Organizations must address a number of issues related to the occurrence of romantic relationships at work. Hierarchical romances (in which one person directly reports to another) and utilitarian romances (in which one person satisfies the needs of another in exchange for task-related or career-related favors) are especially problematic in the workplace.
D. Organizational Justice
Organizational justice includes distributive justice, which deals with the perceived fairness of outcomes individuals receive, procedural justice, which refers the perceived fairness of outcome allocation processes, and interactional justice, which refers to the perceived fairness of interpersonal treatment.
E. Whistle-Blowing
Employees who inform authorities of wrongdoing by their companies or co-workers are referred to as whistle-blowers. They can be perceived either as heroes or villains, depending on the circumstances of the situation.
F. Social Responsibility
The obligation of an organization to behave in ethical ways within its social environment is referred to as social responsibility. Some current concerns include protecting the environment, promoting worker safety, supporting social issues, and investing in the community.
G. Codes of Ethics
Increasing numbers of organizations are implementing codes of ethics. One of the more concise tests of ethical and moral questions is the simple four-way test created by Rotary International in 1904 (see Figure 2.2).
VI. MANAGERIAL IMPLICATIONS: BEATING THE CHALLENGES
VII. LOOKING BACK: PIXAR ANIMATION STUDIOS – The Dream Becomes Reality
CHAPTER SUMMARY
· To ensure that their organizations meet the competition, managers must tackle important challenges: globalization, workforce diversity, and ethical behavior.
· The five cultural differences that affect work-related attitudes are individualism versus collectivism, power distance, uncertainty avoidance, masculinity versus femininity, and time orientation.
· Diversity encompasses gender, culture, personality, sexual orientation, religion, ability, social status, and a host of other differences.
· Managers must take a proactive approach to managing diversity so that differences are valued and capitalized upon.
· Three types of ethical theories include consequential theories, rule-based theories, and character theories.
· Ethical dilemmas emerge for people at work in the areas of employee rights, sexual harassment, romantic involvements, organizational justice, whistle-blowing, and social responsibility.
REVIEW QUESTIONS: SUGGESTED ANSWERS
1. What are Hofstede's five dimensions of cultural differences that affect work attitudes? Using these dimensions, describe the United States.
The dimensions are polarized concepts of the following: (1) individualism/collectivism, (2) high power distance/low power distance, (3) high uncertainty avoidance/low uncertainty avoidance, (4) masculinity/femininity, and (5) long-term orientation/short-term orientation.
The United States is extremely individualistic, tolerant of uncertainty, weak on power distance, masculine, and short term in regard to time orientation.
2. What are the primary sources of diversity in the U.S. workforce?
The U.S. workforce is characterized by diversity of all types: culture, gender, age, personality, sexual orientation, religion, ability, and social status.
3. What are the potential benefits and problems of diversity?
Diversity management may serve as a vehicle for attracting and retaining human resources, enhancing marketing efforts, promoting creativity and innovation, improving problem solving, and enhancing flexibility. Potential problems of diversity include resistance to change on the part of current employees, group cohesiveness may take longer to develop, and diversity may lead to communication problems, conflict, and a slower decision-making process.
4. What is the reality of the glass ceiling? What would it take to change this reality?
The reality of the glass ceiling is that women are not promoted to top management positions at the same rates as men and often are not paid equitably. Efforts to change this reality should include training managers to be aware of biases and stereotypes, and other proactive stances toward the management of diversity.
5. What are some of the ethical challenges encountered in organizations?
Employee theft, environmental issues, issues of comparable worth of employees across job categories, conflicts of interest at work, and sexual harassment are just some of the ethical challenges encountered in organizations.
6. Describe the differences between distributive, interactional, and procedural justice.
Distributive justice addresses the perceived fairness of outcomes, interactional justice addresses the perceived fairness of interpersonal treatment, and procedural justice addresses the perceived fairness of procedures used to determine outcomes.
7. Do organizations need to have formal codes of ethics?
Although there is no actual requirement for organizations to have codes of ethics, such codes can be very beneficial to organizations by providing a general ethical framework within which employees should conduct themselves.
DISCUSSION AND COMMUNICATION QUESTIONS: SUGGESTED ANSWERS
1. How can managers be encouraged to develop global thinking? How can managers dispel stereotypes about other cultures?
All managers can enhance their perspectives by participating in cross-cultural sensitivity workshops offered by organizations. Another way is to volunteer for cross-cultural task forces. Students have opportunities to meet and learn about other cultures on campus by attending the festivals and celebrations that are typically held each academic year for student groups.
2. What effects will the globalization of business have on a company's culture? How can an organization with a strong "made in America" identity compete in the global marketplace?
Globalization will help in understanding needs of current constituents, as well as future clients. By learning about various cultures, organizational members are able to understand
that other companies' missions and objectives are not vastly different from their own, and that they need not surrender their company loyalty to interact and negotiate with others.